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Huntingdon REIT reports 2009 first quarter results

WINNIPEG, May 12 /CNW/ - Huntingdon Real Estate Investment Trust
("HREIT") (TSX: HNT.UN) today reported its operating results for the quarter
ended March 31, 2009. The following comments in regard to the financial
position and operating results of HREIT should be read in conjunction with the
March 31, 2009 Management Discussion and Analysis and the financial statements
for the quarter ended March 31, 2009, which may be obtained from the HREIT
website at www.hreit.ca or the SEDAR website at www.sedar.com.
During 2009, HREIT is focused on attaining improved results through a
number of initiatives, including the divestiture of selected properties, the
paydown of higher cost interim debt and the completion of property renovations
and leasehold improvements. HREIT is also striving to attain improved net
operating income results from its real estate portfolio in an uncertain
economic environment.
During the first quarter of 2009, HREIT incurred a loss from continuing
operations before taxes of approximately $3.3 million, compared to a loss from
continuing operations before taxes of approximately $1.9 million during the
first quarter of 2008 and $2.5 million during the fourth quarter of 2008. The
increase in the loss, in comparison to both the first and fourth quarters of
2008, is mainly due to a decrease in the net operating income of the retail
property portfolio as a result of a reduced occupancy level and an increase in
operating costs.
The decrease in net operating income was also the main contributing
factor in the decrease in cash from operating activities during the first
quarter of 2009. In comparison to the first quarter of 2008, cash from
operating activities, before lease acquisition costs and charges in non-cash
operating items, decreased by approximately $1.3 million, during the first
quarter of 2009.
On May 1, 2009, HREIT completed the sale of Cityplace, at a price of
$81.5 million, and also sold the retail property at 1250 Steeles Avenue in
Brampton, Ontario, at a price of $5.3 million. The sale of the two properties
and, in particular, the sale of Cityplace, enabled HREIT to repay $59.3
million of mortgage debt, $21.5 million of interim financing and improve the
working capital position.
FINANCIAL AND OPERATING SUMMARY
Three Months Ended March 31
-----------------------------
2009 2008
------------ ------------
KEY PERFORMANCE INDICATORS
Operating results
Total revenue 16,538,189 17,286,738
Net operating income 8,457,537 9,822,612
Income (loss) from continuing operations
before income tax recovery (expense) (3,341,278) (1,859,724)
Income (loss) from continuing operations (2,721,672) (1,129,160)
Income (loss) for the period (2,809,303) (1,965,345)
Cash flows
Cash inflow (outflow) from operating
activities 1,825,413 1,767,180
Funds from Operations (FFO) 906,412 2,816,011
Adjusted Funds from Operations (AFFO) 1,229,979 1,366,843
Distributable income 1,753,093 3,078,770
Operations
Quarter end occupancy rate 93% 92%
Increase (decrease) in same property operating
income (15)% (1)%
Capital reinvestment
Additions to building and equipment 53,905 504,256
Additions to properties under development - 2,578,872
Lease acquisition costs 557,817 1,503,346
DISTRIBUTIONS
Amount - total - 5,061,040
- per unit - 0.07
Financing
Mortgage loan debt to gross book value ratio 54% 59%
Weighted average interest rate of long-term debt 5.83% 6.44%
PER UNIT AMOUNTS
Three Months Ended March 31
2009 2008
----------------- -----------------
Basic Diluted Basic Diluted
------- --------- ------- ---------
Operating income 0.116 0.116 0.136 0.136
Income (loss) from continuing
operations before income tax
recovery expense (0.046) (0.046) (0.026) (0.026)
Income (loss) from continuing
operations (0.037) (0.037) (0.016) (0.016)
Income (loss) for the period (0.038) (0.038) (0.027) (0.027)
Funds from Operations (FFO) 0.012 0.012 (0.039) (0.039)
Adjusted Funds from
Operations (AFFO) 0.017 0.017 (0.020) (0.020)
Distributable income 0.024 0.024 (0.043) (0.043)
First Quarter 2009 Compared to First Quarter 2008
- NOI decreased by approximately $1.4 million or 14%, mainly due to a
decrease in NOI from the retail property portfolio, as a result of a
decrease in the occupancy level, and an increase in operating costs.
- Loss from continuing operations before taxes increased by
approximately $1.5 million primarily due to the decrease in NOI.
- After considering the decrease in future income tax recoveries of
$111,000 and the decrease in the loss from discontinued operations of
$749,000, the overall loss increased by $844,000.
- Cash provided by operating activities, excluding changes in non-cash
operating items decreased by $353,000. The decrease mainly reflects
the decrease in NOI, largely offset by a decrease in lease acquisition
costs of $946,000.
- FFO decreased by $1.9 million or 68% during the first quarter of 2009,
compared to the first quarter of 2008, while AFFO decreased by $68,152
or 5%. On a per unit basis, FFO decreased by $0.026 per unit, while
AFFO decreased by $0.002 per unit.
- Distributable Income decreased by $1.3 million or 42%, during the
first quarter of 2009, compared to the first quarter of 2008
Comparison to Preceding Quarter
-------------------------------------------------------------------------
Three Months Ended Effect on
--------------------------- Income
March 31, December 31, Increase
2008 2008 (Decrease)
-----------------------------------------
Total revenues $ 16,538,189 $ 17,832,706 $ (1,294,517)
Total operating and property
management costs 8,080,652 7,986,659 (93,993)
------------- ------------- -------------
Net operating income 8,457,537 9,846,047 (1,388,510)
Trust expenses 790,473 718,148 (72,325)
Strategic review expense - 382,574 382,574
------------- ------------- -------------
Income before financing expense,
amortization, discontinued
operations and taxes 7,667,064 8,745,325 (1,078,261)
Financing expense 6,673,021 6,731,264 58,243
------------- ------------- -------------
Income before amortization,
discontinued operations and
taxes 994,043 2,014,061 (1,020,018)
Amortization 4,335,321 4,569,535 234,214
------------- ------------- -------------
Loss from continuing operations
before income tax
recoveries/expense (3,341,278) (2,555,474) (785,804)
Income tax recoveries 619,606 (1,014,436) 1,634,042
------------- ------------- -------------
Loss from continuing operations (2,721,672) (3,569,910) 848,238
Income from discontinued
operations (87,631) (105,035) 17,404
------------- ------------- -------------
Income (loss) for the period $ (2,809,303) $ (3,674,945) $ 865,642
------------- ------------- -------------
------------- ------------- -------------
Excluding income tax recoveries and discontinued operations, HREIT
incurred a loss of approximately $3.3 million during the first quarter of
2009, compared to a loss of approximately $2.5 million in the fourth quarter
of 2008, representing an increase in the loss of approximately $800,000. The
increase in the loss mainly reflects a decrease in net operating income,
partially offset by a decrease in strategic review expense and amortization
charges.
After including income tax recoveries and discontinued operations, HREIT
completed the three month period ended March 31, 2009 with a loss of $2.8
million compared to a loss of $3.6 million during the fourth quarter of 2008.
Outlook for 2009
In 2009, HREIT is focused on attaining improved results through a number
of initiatives, including the divestiture of selected properties, repayment of
higher cost interim debt, and the projected completion of over $12 million in
property improvements and upgrades
With only $2.3 million of higher rate interim financing mortgages
remaining, HREIT expects to achieve a substantial reduction in debt service
costs during the remainder of 2009. The reduction in debt service costs,
combined with a budgeted improvement in net operating income from continuing
properties and the completion of value-added capital expenditures, should
result in an improvement in overall operating results, commencing in the
second quarter of 2009. Additional property sales are targeted for the second
and third quarter of the year, which should further strengthen the overall
financial position.
About HREIT
-----------
HREIT is a real estate investment trust, which is listed on the Toronto
Stock Exchange under the symbols HNT.UN (Trust Units) and HNT.DB.C (Series C
Convertible Debentures). HREIT owns 75 income producing office, industrial,
retail and standalone parking lot properties that have a total gross leaseable
owned area of 4.9 million square feet; two land parcels held for development
and other development and expansion opportunities within the existing
portfolio. The properties are located in Manitoba, Ontario, Saskatchewan,
Alberta, British Columbia and Northwest Territories. HREIT also owns CRESI
Inc., a third party property management business. For further information on
HREIT, please visit our website at www.hreit.ca.
This press release contains certain statements that could be considered as
forward-looking information. The forward-looking information is subject to
certain risks and uncertainties, which could result in actual results
differing materially from the forward-looking statements.
The Toronto Stock Exchange has not reviewed or approved the contents of
this press release and does not accept responsibility for the adequacy or
accuracy of this press release.